Earlier this year, the CA legislature passed a law further qualifying who may legally be considered an Independent Contractor vs. who must be an employee. Per the CA Legislature, the person is an employee – unless the individual meets the three criteria below:
- The person under their own control… meaning, the company does not stipulate when, how or under what conditions the work in accomplished. For example, if hours are set by the company – this condition is NOT met.
- Is the work performed by the person outside of the usual business of the company? If yes, then this person can be classified as a 1099, if no, this is an employee. For example, if a tree trimming company wants someone to pick up tree debris or other task associated with the services marketed by the company, the individual must be an employee. If a tree trimmer wants a bookkeeper, they can be 1099 as they are not offering the same services as the company.
- The person is does this type of work as their own business. For example, following the scenario above – a bookkeeper would normally have multiple bookkeeper clients and this would be the bookkeeper’s profession or trade. Now, if the bookkeeper was being hired by an accounting venture for bookkeeping, this gets a little cloudy. This is why all 3 of these criteria must be met to pass this litmus test.
For more information… visit here – AB5